China stocks face a tough open after the Nasdaq Golden Dragon China Index fell as much as 6.4% in the US. The S&P 500 was little changed, suggesting an uninspired session ahead for the broader Asia stock market. The news flow is running bearish on China:

• The PBOC looks set to withdraw cash from the financial system.
• China accused the US of “technological terrorism” in pushing to stop ASML and Nikon Corp. from selling chipmaking technology to the country.
• Rising Covid-19 infections across Shanghai raised the specter of another lockdown. Cases are rising in Hong Kong’s hospitals.
• The top US official in Hong Kong urged China not to further endanger the laws and values that helped the city.

함의: 부정적 뉴스 플로우가 집중되면서 미국 상장 중국 주식 지수는 큰 폭 하락함.

Carlyle Group Inc.’s new $8.5 billion Asia fund aims to have as little as half the exposure to Greater China as previous funds, driven by investor concern over rising geopolitical risks and regulatory uncertainty in Beijing, according to people familiar with the matter. The Washington-based asset manager is telling investors that the targeted China exposure for its sixth Asia fund will be about 20% to 40%, compared with 40% to 50% on average for predecessor funds, said the people, asking not to be identified as they’re not allowed to discuss fundraising.

함의: 칼라일의 신규 아시아 투자 펀드는 지정학적 위험과 규제 불확실성으로 인해 중국 비중을 기존 펀드에 비해 절반으로 줄여서 운용할 계획임.

Samsung Electronics Co. reported its slowest profit growth in more than two years after rising materials costs and lukewarm consumer demand squeezed margins. Operating profit rose to 14 trillion won ($10.7 billion) for the three months ended June, South Korea’s biggest company said Thursday in a statement. Analysts had estimated 14.6 trillion won on average. Sales increased 21% to 77 trillion won, slightly above estimates. Samsung will provide net income and split out divisional performance with its full report at the end of this month. 

함의: 삼성전자 실적, 원자재 가격 부담과 수요 둔화로 2년래 가장 느린 성장을 보임.

FBI Director Christopher Wray warned Western companies that China aims to “ransack” their intellectual property so it can eventually dominate key industries, escalating a dispute between the world’s two largest economies over hacking. The Asian nation’s spies were snooping on “companies everywhere from big cities to small towns -- from Fortune 100s to start-ups, folks that focus on everything from aviation, to AI, to pharma,” Wray said in remarks to a gathering of business leaders and academics in London. He appeared alongside the head of MI5, Ken McCallum -- the first time the heads of the Federal Bureau of Investigation and the UK’s domestic counter-intelligence agency have shared a forum.

함의: FBI 국장이 중국은 지적재산권 약탈로 핵심기술을 지배하려 한다고 노골적으로 공격함.

South Korean hedge fund Billionfold Asset Management Inc. said it started buying Samsung Electronics Co. this week on the view the stock’s plunge of almost 40% from a record high is coming to an end. Excessive selling has made Samsung shares attractive, An Hyungjin, the chief executive officer of the 170 billion won ($130 million) fund, said in an interview in Seoul on Wednesday.  “We are nearing the bottom,” An said. Samsung shares were up as much as 3.2% in morning trading in Seoul Thursday after the company reported a better-than-anticipated 21% jump in revenue, assuaging investors’ worst fears about the impact of weakening consumer demand and soaring materials costs on tech giants. The fund posted a 1% loss during the first six months of this year, An said, outperforming the benchmark Kospi’s 22% slide and Kosdaq’s 27% slump.

함의: 상반기 하락을 적극 방어했던 국내 헤지펀드가 삼성전자에 대한 긍정적 투자의견을 제시함.

Deflating global goods demand, improving supply chains, falling commodity prices and limited wage pressures suggest to us that Asia’s inflation risks have peaked. Consequently, central banks will not need to hike rates to the extent that markets are pricing in.

보고서: 아시아 지역의 인플레이션인 정점을 지나고 있어 중앙은행이 지나친 긴축을 지속할 이유는 없어 보임. (Morgan Stanley - Asia's Inflation Risks Have Peaked)

Lombard Odier fund manager Aurele Storno says he holds an embarrassingly high level of cash in his portfolios but sees few better alternatives as risks abound across most asset classes. The Swiss firm, which has been managing money for the wealthy since 1796, is running more than 50% cash across the $4 billion in a fund strategy that Storno manages. Aside from a brief period a few weeks ago, that’s the highest level since the depths of the pandemic, when cash was at 65%. “I feel very uncomfortable, very embarrassed -- I don’t like to have cash because people are paying me to invest money,” Storno said in an interview from his London office. “But at some point when everything goes wrong, you know, the saying goes, ‘cash is king.’ There’s no way to hide.”

함의: 고객이 투자하라고 맡긴 돈을 현금으로 두긴 싫지만, 불확실성이 현실화 됐을 때를 대비해 대유행 당시에 근접하는 현금을 보유하고 있다 함.

US stocks rose as fears about inflation and the pace of monetary tightening faded, while commodities got a boost from China’s $220 billion stimulus plan. The S&P 500 and the Nasdaq 100 climbed for the fourth straight day. The US two- and 10-year yield curve remained inverted for a third day. US jobless claims rose last week, signaling that the strength in the labor market is moderating. Commodities from oil to copper rose as the dollar retreated for the first time in five days.

함의: 인플레이션 우려 완화, 중국 대규모 부양 등 호재로 주식은 나흘째 상승, 국채 수익률 역전은 사흘째를 기록 중임.

Mortgage rates in the US posted the biggest one-week decline since 2008. The average for a 30-year loan fell to 5.3%, the lowest in a month and down from 5.7% last week, Freddie Mac said in a statement Thursday. Buyers are getting a slight reprieve from this year’s massive rise in rates that has started to cool parts of the US housing market. The jump in costs has pushed more buyers out of the real estate hunt, causing inventory to increase. Sellers have started to cut prices in certain areas. “While the drop provides minor relief to buyers, the housing market will continue to normalize if home-price growth materially slows due to the combination of low housing affordability and an expected economic slowdown,” said Sam Khater, Freddie Mac’s chief economist. 

함의: 모기지 금리 1주 하락폭이 2008년 이후 최대치를 기록했고, 주택 가격의 과열이 진정되는 움직임이 보임.

The latest data signal US consumers are willing and able to spend. That, and a still-hot labor market, can ease concern about the brutality of whatever potential recession may be looming and support equities. Fresh credit and debit card figures from BofA show consumer spending rose 11% year-over-year in June (versus April’s 13% and May’s 9%). The bank said spending showed signs of resiliency and that services spending, including travel and entertainment, continued to be boosted by pent-up demand, while balance sheets are in good shape. There are caveats, as inflation is clearly stinging, and demand for domestic travel may be waning. Inflation’s particular pain for lower-income households shows with the share of spending on gas climbing to 9.8% in June from 7.7% in February.

함의: 일부 데이터에서는 미국 소비 여력이 여전하다는 것을 알 수 있음.

China is considering a $220 billion stimulus to boost the economy. The Ministry of Finance may allow local governments to bring forward sales of 1.5 trillion yuan of bonds to the second half of the year — mostly to be used for infrastructure spending — from next year's quota. It's the first time the issuance has been fast-tracked in this way, underscoring growth concerns in Beijing. Commodities and US-listed Chinese stocks rallied.

함의: 중국이 2,200억 달러의 대규모 부양책을 고려하고 있으며, 방식과 속도에서 성장 둔화를 피하겠단 의지를 확인할수 있음.

Don't get too optimistic about US stocks, volatility traders are signaling. The call-put option on the VIX jumped on Wednesday to levels unseen for some two and a half years, driven by bets on fresh market turmoil. The hedging activity stands out given the fact Wall Street's fear gauge has failed to hit new highs since March even as the S&P 500 careened to fresh lows.

함의: 낙관론자는 지수가 연 중 최저를 기록할 때 공포와 탐욕 지수는 그렇지 못한 점, 수요일 변동성 지수에 대한 풋 옵션 대비 콜 옵션 매수 비율이 2년래 최고치를 기록한 점을 유의해야 함.

US General Mark Milley spoke with his Chinese counterpart General Li Zuocheng, the latest sign of increased communication ahead of a pending Joe Biden-Xi Jinping call. They discussed "improving crisis communications and reducing strategic risk," a US spokeman said. Li told Milley the US should end military "collusion" with Taiwan, China said.

함의: 말만 많을 뿐.

Two of the Federal Reserve’s most hawkish policy makers backed raising interest rates another 75 basis points this month to curb inflation, while playing down fears the US economy was headed for recession. Governor Christopher Waller and James Bullard, president of the St. Louis Fed, both stressed the need to get policy into restrictive territory to confront the hottest price pressures in 40 years, even if this meant slowing growth. Both are voting members of the Federal Open Market Committee this year.

함의: 매파적 성향의 연준 인사 둘은 희생을 감수하더라도 75bp 금리인상을 통해 물가 통제를 우선해야 한다고 주장함.

A quarter-trillion dollar pile of distressed debt is threatening to drag the developing world into a historic cascade of defaults. Sri Lanka was the first nation to stop paying its foreign bondholders this year, burdened by unwieldy food and fuel costs that stoked protests and political chaos. Russia followed in June after getting caught in a web of sanctions. Now, focus is turning to El Salvador, Ghana, Egypt, Tunisia and Pakistan — nations that Bloomberg Economics sees as vulnerable to default. As the cost to insure emerging-market debt from non-payment surges to the highest since Russia invaded Ukraine, concern is also coming from the likes of World Bank Chief Economist Carmen Reinhart and long-term emerging market debt specialists such as former Elliott Management portfolio manager Jay Newman.

함의: 개발도상국의 채무불이행에 따른 도산 위험이 높아지고 있음.

Early Asia trading will be focused on the Bloomberg scoop that China is mulling bringing forward $220 billion of bond sales to accelerate its infrastructure push. Overall, my takeaway is that investors are correct to take it positively, particularly for EM assets, as the message is good. Especially as stocks seem ripe for a bit of a bear-market rally. Just don’t think this is a major macro turning point. It will soon be forgotten again, amid the twin scourges of elevated inflation and slowing growth.

함의: 본질적 문제라 할 수 있는 높은 물가와 낮은 성장이 미해결이란 것을 잊지 않아야 함.

Realized and implied volatility in US bonds has soared, but the pattern here is making it look like 3% is now the golden mean when it comes to the benchmark 10-year Treasury yield. ICE’s MOVE index of expected price swings, often referred to as the fear gauge for bonds, has jumped around the periods when the yield topped that round number, and the index also bottomed out in late May when the yield got a substantial way below 3%. Chances are volatility will keep grinding higher until it becomes apparent whether 3% is a ceiling or a floor for yields over the longer term.

함의: 채권 변동성 지수를 통해 투자자들의 심리를 유추해보면, 미국 국채 10년물 금리 3% 수준이 최적의 평균으로 보임.

Commodities remain the best macro hedge. Although we expect spot prices to remain vulnerable to spec length liquidations triggered by negative economic news flow, we believe it is premature for commodities to succumb to recession concerns when the global economy is still growing and markets remain in deficit on strong demand. Thus, we view this price pullback as a longer-term buying opportunity. Barr a large synchronous negative global demand shock that creates a level-shift down in demand, we believe demand rationing will remain the dominant theme for energy and food commodities while an accelerated stimulus program in China should help to create a turnaround in base metals pricing in Q3. Thus, we believe the correlation between commodities and other risky assets is set to decline again given that commodities are spot assets while risky assets discount future expectations that have turned more negative. It is important to remember that, with the exception of the GFC, commodities have been a great macro hedge, with all sectors delivering positive returns during large drawdowns in 60/40 portfolios since 1990.

보고서: 경기침체 공포 속에 모든 자산군이 하락하며 원자재도 예외가 아니었으나, 여전히 거시경제 역풍을 방어하는데 원자재는 최적의 수단임. (Goldman Sachs - Commodities oversold on recession fears)

Yen spiked in an initial risk-off reaction to reports that former prime minister Shinzo Abe was shot, says Akira Moroga, manager of currency products at Aozora Bank in Tokyo.

Bloomberg reported that Beijing may front-load use of Rmb1.5trn (US$220bn) local govt. special bond (LGSB) quota from 2023 to 2H22. Reuters also reported on July 5 that a Rmb500bn infrastructure fund could be set up in 3Q. If materialized, these coupled with policy banks' Rmb300bn financial bonds and Rmb800bn credit could help sustain infrastructure capex momentum beyond August, when MoF requires all the Rmb4.8trn LGSB proceeds to be deployed into projects. In turn, the fiscal and quasi-fiscal boost to infrastructure would reach >Rmb7trn this year, 3x last year's Rmb2.4trn, outweighing slower land revenues and continued scrutiny over local hidden debt and lifting full-year infra. FAI growth to 9-10% (vs. 8.2% YTD and 1.8% p.a. in 2020-21). Separately, echoing a strong pro-growth mindset, China further eased intercity travel restrictions despite the recent flare up in Ba.5 variant, halving travel history tracing to 7 days. These combined support a gradual growth recovery in 2H (3.7% YoY vs. 0.5% in 2Q).

보고서: 중국의 성장률은 부양은 늘리고 규제는 줄이면서 회복할 것임. (Morgan Stanley - More Stimulus, Less Restrictions)

President Joe Biden will discuss possible reductions in US tariffs on Chinese goods in a meeting with his advisers set for Friday, according to people familiar with the matter, as his administration nears a closely-watched decision on trade with China. The White House meeting is the latest in a series Biden has held on the issue, and it’s not clear if he intends to decide on a path forward, according to the people, who spoke on the condition of anonymity because the president has yet to reach a decision. 

함의: Will, will, will...